On April 4, 2017, Attorney General Maura Healey announced that Unified Life Insurance Company (“Unified”) had agreed to a consent judgment to settle Unified’s liability for deceptive and unlawful practices in offering and selling a short-term medical coverage policy to Massachusetts consumers.

Under the consent judgment, approved by a Superior Court judge, Unified must pay no less than $2,348,000 for unpaid claims and premium reimbursement to its Massachusetts policyholders. And Unified must pay $450,000 in civil penalties to the commonwealth and $15,000 in investigative costs to the Attorney General.

Although licensed in Massachusetts, Unified never obtained commissioner’s approval for its policy form

Unified is a Texas company, headquartered in Kansas licensed to conduct life, health and annuity insurance and reinsurance business in 49 states (all but New York) and the District of Columbia.

Unified, per its website, claims to operate primarily as an acquirer of insurance companies or re-insurer of life, health and annuity risks written by other companies. Most of the administrative functions are handled from its office in Overland Park, Kansas. Besides the acquisition and reinsurance activities, the company offers policies in niche markets on a direct sales basis.

In Massachusetts, Unified offered and marketed its short-term medical insurance policy through agents and in coordination with one or more third-party associations, including the National Congress of Employers, a Washington-based association for micro-businesses.

All health benefit plans sold to individuals or small groups in Massachusetts have be filed with the Massachusetts Division of Insurance for the approval of the Massachusetts Commissioner of Insurance (the “Commissioner”). Unified’s short-term medical insurance policy had several provisions violating Massachusetts law. However, before it sold its policy to Massachusetts residents Unified never obtained the approval of the Commissioner of Insurance for the policy form.

misrepresented the policy to consumers seeking insurance from the Massachusetts health connector;

misrepresented the policy’s as meeting the federal individual mandate;

failed to disclose the policy did not meet the Massachusetts individual mandate;

failed to provide clear and conspicuous disclosure of premium;

failed to disclose policy limitations in describing benefits;

failed to disclose premium impact on benefit level options;

failed to adequately disclose the nature of the policy in application forms

The AG’s complaint alleged that Unified excluded Massachusetts consumers from coverage based upon their health status or preexisting conditions and denied claims on an illegal exclusion for preexisting conditions and health status. The AG’s complaint also alleged the Unified failed to cover basic health services–such as behavioral health services, maternity services, preventive services for women and children, and other mandatory benefits required by Massachusetts law.

Attorney General decries federal proposals to limit state regulation of health insurance

The Attorney General alleged in her filing with the Superior Court that Unified’s conduct harmed Massachusetts consumers and the Massachusetts health insurance market because Unified sought to profit from siphoning healthy consumers out of the Massachusetts health insurance market and insuring them under coverage that violated Massachusetts law in multiple ways.

“This company sold sub-par health insurance that violated state law,” said Attorney General Healey. “Recently revived federal proposals to take away our state’s longstanding authority to oversee sales of health insurance will leave consumers and families more vulnerable to exploitation and create a ‘race-to-the-bottom’ that will raise prices and reduce access to quality health care for those in need.”

In commenting on the Attorney General’s action Donald M. Berwick, President Emeritus of the Institute for Healthcare Improvement and former Administrator of the Centers for Medicare and Medicaid Services said. “I applaud our Attorney General for protecting a level playing field in Massachusetts, where insurers compete on providing better health care, not on discriminating against those with preexisting conditions. Our state has a strong history of setting basic standards for health insurance that its residents can depend on.”

The consent decrees allowed by the Suffolk Superior Court beside enjoining Unified from any future violations of Massachusetts insurance law also requires Unified to:

Reimburse its Massachusetts policyholders seventy (70%) percent of any premiums paid between January 1, 2012 and April 2, 2017, the filing date of the consent judgment, with interest at five (5%) percent per annum.

Report in writing to the Attorney General it has:

performed a reasonably diligent review of claims submitted to Unified since January 1, 2012, by or on behalf of any Massachusetts resident,

reprocessed any such claim denied in part or in whole in violation of the Massachusetts mandates,

sent an explanation of benefits for the reprocessed claims and

paid the full benefits that should have been paid under Massachusetts law.

Report in writing to the Attorney General within nine (9) months after the Consent Judgment:

the total amount of all checks issued for premium reimbursement and benefit payments to Massachusetts residents,

the total amount of any such checks issued but not cashed, and

pay the Commonwealth any uncashed checks issued under the Consent Judgment.

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About Owen Gallagher

Owen Gallagher is an experienced insurance litigator as well as a certified mediator and arbitrator who specializes in insurance industry disputes. His interest and affinity for insurance began at a young age working the counter at his father’s assigned risk agency in Roxbury. Over the course of his career, Owen has argued a number of cases in the Massachusetts Supreme Judicial Court and has helped agents, insurance companies, and lawmakers alike with the complexities and idiosyncrasies of insurance law in the Commonwealth. Owen can be reached here.

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